Yesterday\'s upward trend of the European currency was caused by the major players support after a sharp surge a day earlier. Moving within a flat range 1.4474-1.4534 during the whole Asian session and the most part of the European deals, finally the pair suceeded to break through a strong resistance level and renew the local high at 1.4602, touching an essential psychological level around the 46 big figure. By the end of the trading day the EUR/USD currency pair had adjusted to 1.4534, but did not manage to tick down below this zone. On the whole, the single currency rallied by 82 points against the US dollar.
Speaking about the Eurozone fundamental data, worht pointing out the Germany consumer price index, which remained at the last month late reading of 0.2%, coming in line with the experts forecasts, which also remained unchanged.
A slight scepticism among major investors took place amid the pair\'s increase on Tuesday. This resulted in initial pair\'s sticking in the price channel during the deals on Wednesday, and also in interruption of stock indexes and gold price advancement.
Due to absence of strong microeconomic figures, only the US MBA refinance index can be pointed out, which stood at +17%, compared to the last period reading.
According to the Beige book, the retail sales in the USA rose by +0,2% on month against the same period of last year, the decline amounted to -2.4% y-o-y. The labour markets are still weak in most regoins. The lending demand remained low, the lending conditions are very strict, however, in most regions is seen the downside pressure on house prices.
A small speech of Federal Reserve Bank President Charles Evans concerning that deflation in the USA was prevented, although it is too early to stop a smooth policy of the Federal Reserve System, did not bring any mess into the market allowing the pair continue its strengthening.
The technical picture remains rather interesting. Let us construct another line of rising price channel, but bigger one, which can turn out to be a significant resistance level in the future on the way of the European currency growing. This line takes its rise from high of June 11, 2009. Presently, as you can see, the pair is the middle of up-going price channel, starting from August, 13.
The next support level is around 1.4534-40, then follows the channel bound and support at 1.4474. The resistance is at 1.4602, and also correctional Fibo level at 61.8%, the beginning comes from initial European currency drop.
The Bollinger bands continue to demonstrate a high volatility rate in the market, widening its bounds more and more. Now the pair is trading in the upper diapazon, and the middle bands can be considered as the pair\'s dynamic support level.
Today I recommend to buy the pair at 1-hour timeframe closing above 1.4621 with the target – T/P 1.4571 and S/L 1.4680
Sell the pair at 1-hour timeframe closing below 1.4527 with the target – T/P 1.4460 and S/L 1.4566.
Best regards,
Analyst: M.A.Magdalinin
